Business & Finance
Business and Finance
Business and Finance
Tue, July 13, 2010
Mon, July 12, 2010 Capital One Financial, Telefonica, SurModics, Royal Bank of Scotland and Angiotech Pharmaceuticals
CHICAGO--([ BUSINESS WIRE ])--[ Zacks Equity Research ] highlights: Capital One Financial (NYSE: [ COF ]) as the Bull of the Day and Telefonica (NYSE: [ TEF ]) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on SurModics Inc. (Nasdaq: [ SRDX ]), Royal Bank of Scotland (NYSE: [ RBS ]) and Angiotech Pharmaceuticals Inc. (Nasdaq: [ ANPI ]).
Full analysis of all these stocks is available at [ http://at.zacks.com/?id=2678 ].
Here is a synopsis of all five stocks:
[ Bull of the Day ]:
Capital One Financial's (NYSE: [ COF ]) first quarter earnings were substantially ahead of the Zacks Consensus Estimate, driven primarily by higher-than-expected revenues and a lower provision for loan losses.
Even though a mixed credit quality was not very impressive during the most recent reported quarter, we anticipate continued synergies from the company's geographic diversification and expense management initiatives. Additionally, the resilience of almost all of its businesses will continue to support the company's financials.
Our six-month target price of $51.00 equates to 13.9x our earnings estimate for 2010. Combined with the quarterly dividend of $0.05 per share, this target price implies an expected total return of about 19.4% over that period. This is consistent with our Outperform recommendation on the shares.
[ Bear of the Day ]:
We are downgrading our recommendation to Underperform for Telefonica (NYSE: [ TEF ]) due to its conflict with Portugal Telecom for the full control of their Brazilian wireless joint venture.
Despite solid results, Telefonica remains challenged by a weak Spanish economy which is contributing to sustained erosion in the domestic wireline voice business. Additionally, reduced tariff rates imposed by Spanish and European regulations are tightening wireless revenue per user.
We also remain cautious with regard to the carrier's aggressive acquisition strategy, increasing competitive exposure and a highly leveraged balance sheet. Accordingly, we lower our price target to $53 per share, based on 8.4x our 2010 EPADS estimate.
Latest Posts on the Zacks [ Analyst Blog ]:
SurModics Inks Deal
Recently, SurModics Inc. (Nasdaq: [ SRDX ]) inked a licensing deal with Australian company Clinuvel Pharmaceuticals Limited. The deal allows SurModicsa™ pharmaceuticals unit, which provides proprietary polymer-based drug delivery technologies to companies developing advanced pharmaceutical products, to license some of its biodegradable polymer implant technology to the Melbourne-based company. The technology is used for treating sun-induced skin disorders. The clauses of the deal were undisclosed.
The two companies have been working together to develop Clinuvel's proprietary sustained release SCENESSE (afamelanotide) implant formulation for many years. The formulation is being developed as a preventive treatment for ultraviolet (UV) and light-related dermatological deficiencies. The implant is being studied for treating a range of dermatological disorders not only in Australia but also in Europe.
SurModicsa™ biodegradable polymer drug delivery technology permits afamelanotide to be released in a sustained and controlled manner. This encourages melanin to be produced in the skin of the patient, thereby providing protection from UV and light exposure. Melanins refer to insoluble pigments that account for the color of the skin, among other things.
The market opportunity for Clinuvel's afamelanotide for the UV-related disorders being evaluated by the company is estimated by the Royal Bank of Scotland (NYSE: [ RBS ]) to exceed seven million patients across the globe.
We believe the deal provides further opportunities to Clinuvel to develop additional compounds for the treatment of skin related disorders caused by light exposure. This will broaden the treatment opportunities for patients suffering from such disorders.
SurModics, which provides surface modification and drug delivery technologies to medical device and pharmaceutical companies, competes mainly with Angiotech Pharmaceuticals Inc. (Nasdaq: [ ANPI ]).
Get the full analysis of all these stocks by going to [ http://at.zacks.com/?id=2649 ].
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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